Multiple Choice
Scenario 34.1 Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar.In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day.In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar.
Refer to Scenario 34.1.Which of the following statements is true?
A) Brazil has a comparative advantage in producing coffee.
B) Brazil has a comparative advantage in producing both coffee and sugar.
C) Chile has a comparative advantage in producing both coffee and sugar.
D) Neither Chile nor Brazil has a comparative advantage in producing coffee.
E) Brazil has a comparative advantage in producing sugar.
Correct Answer:
Verified
Correct Answer:
Verified
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